Wednesday, October 03, 2012

The latest news: I am officially a landlady now. I have rented out my apartment, furnished, and my lovely tenants have already set up an automatic payment so the rent goes straight into my bank account every month. It exceeds my monthly costs by a couple hundred dollars right now, not counting tax deductions, though that will fluctuate depending on the utility bills. For better or for worse, I decided it would be simpler to keep the gas, electric, and internet in my name and just build those costs into the rent. I did write it into the lease that the tenants would have to pay for usage over a certain level upon my providing them with a copy of the bill. Even when heat and AC are higher, I think I'll still end up
with positive cash flow almost every month, and on average for the whole
year.
So having given up my apartment, I have officially moved in with Sweetie. Sweetie never asked me for any contribution to the household expenses, though I've tended to buy all the groceries and about half the meals out, but on my insistence, we figured out a fair amount for me to contribute, and I've set that up as a monthly outgoing auto-payment. My net housing costs are now going to be about half what they were, maybe less.

All this is good news in terms of my being able to save more money. I'm not sure what I'll do about my apartment long term-- I'm hoping I can rent it for a year or two and then maybe sell it, as real estate prices seem to be turning around a wee bit. I've actually already had an offer from a potential buyer-- someone who owns one of the other units in my building said he'd be interested in buying it, though he didn't say at what price. But if he's serious, that could be an interesting possibility, as I wouldn't have to pay a real estate agent's commission. But for now, I'm just glad to have that rent money coming in, and it was convenient to be able to leave most of my furniture there too. Since it would be a nuisance to deal with selling or storing the furniture, I may also consider shorter term AirBnB type rentals-- I'd make more money, potentially, if I could keep the place booked. And it would also allow me to block out time for when my family and friends might want to stay there. Sweetie's apartment is bigger than mine was, but we're a bit tight for storage space for all our stuff, and if my sister and her husband and kids come to visit, there will be quite a line for the one tiny bathroom!

It will be interesting to talk all this property rental stuff through with my accountant in the spring. She had suggested that I might need to increase my witholding, as I'll have a lot more income when you include the rent, and my deductions will now include depreciation on an investment property instead of mortgage interest on a primary residence. I'll fill you in in a few months!

4 comments:

Congrats on becoming a landlady! I have become one just recently too:) The rent I receive does not quiet cover the monthly payments to the bank but it surely helps the cash flow. I have not taken out a mortgage for this apartment. I took a three year loan with a slightly higher interest rate than a mortgage. After 18 more months, I will have no debt on the apartment.

Congrats! We're landlords as well when we tried and failed selling our property. It has worked out for us with the tenants paying our mortgage, taxes and insurance. We don't make anything but at least the mortgage is getting paid.

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